RDSP Guide: Registered Disability Savings Plan

What is an RDSP?

A Registered Disability Savings Plan (RDSP) is a long-term savings plan designed to help Canadians with disabilities and their families save for the future. The government provides matching grants and bonds to help your savings grow.

Key benefit: The government can contribute up to $90,000 in grants and bonds over your lifetime - money you don't have to pay back (as long as you follow the rules).

Who is Eligible?

To open an RDSP, you must:

• Be a Canadian resident with a valid Social Insurance Number (SIN)
• Be under age 60
• Be eligible for the Disability Tax Credit (DTC)

Important: You must be approved for the DTC before opening an RDSP. Apply using Form T2201 through your doctor and the CRA.

Canada Disability Savings Grant (CDSG)

The government matches your contributions based on your family income:

Lifetime grant limit: $70,000

Available until: Age 49 (no grants after December 31 of the year you turn 49)

Canada Disability Savings Bond (CDSB)

Even if you don't contribute, the government may deposit bonds directly into your RDSP based on family income:

Lifetime bond limit: $20,000

Available until: Age 49 (no bonds after December 31 of the year you turn 49)

Contribution Rules

• No annual limit - contribute as much as you want each year
• Lifetime contribution limit: $200,000
• Contributions allowed until: December 31 of the year the beneficiary turns 59
• Who can contribute: Anyone with the beneficiary's permission (family, friends, the beneficiary themselves)
• Tax treatment: Contributions are NOT tax-deductible, but investment growth is tax-free inside the plan

Withdrawals & the 10-Year Rule

You can withdraw from your RDSP, but there's an important rule to know:

Example: If you received $10,000 in grants/bonds in the last 10 years, and you withdraw $2,000, you'd have to repay $6,000 in grants/bonds to the government.

Strategy: Many people wait at least 10 years after their last grant/bond before withdrawing to avoid repayment.

Withdrawals are taxable: The beneficiary pays tax on grants, bonds, and investment growth (but not on original contributions).

Carry-Forward Rules

If you open an RDSP late or miss years of contributions, you can catch up on grants and bonds:

• Grants: Carry forward up to 10 years of unused grant room
• Bonds: Carry forward up to 10 years of unused bond entitlement
• Annual catch-up limit: You can receive up to $10,500 in grants and $11,000 in bonds in a single year if you have carry-forward room

This means even if you open your RDSP at age 30, you can still claim grants and bonds from age 20 onward (if you were DTC-eligible).

Where to Open an RDSP

You can open an RDSP at most Canadian banks and credit unions. Popular options include:

• TD Bank
• RBC
• BMO
• CIBC
• Scotiabank
• Credit unions

What you'll need: Proof of DTC eligibility, SIN, ID, and beneficiary information.